|Title:||Economists Examine File-Sharing and Music Sales|
|Author(s):||Liebowitz, S. J.|
|Citation:||Liebowitz, S. J. (2005). Economists examine file-sharing and music sales.Industrial organization and the digital economy, 145-174.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Bhattacharjee, Gopal, Lertwachara, Marsden and Telang (2007), Danaher, Smith, Telang and Chen (2012), Depoorter and Walker (2013), Handke (2012b), Hennig-Thurau, Henning and Sattler (2007), Herz and Kiljański (2016), Leung (2009), Liebowitz (2018), Liu (2015), Mateus and Peha (2008), Shang, Chen and Chen (2008), Thomes (2013), Van Eijk, Poort and Rutten (2010), Waldfogel (2009), Watson, Zizzo and Fleming (2016)|
|About the Data|
|Data Description:||Data includes a literature review of various recent studies and analyses examining the impact of file-sharing on record sales.|
|Data Type:||Primary and Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
At the center of the file-sharing debate is the empirical issue of whether or not file-sharing decreases sales. I should note that file-sharing can have a strong negative impact on sales even when a majority of downloads do not replace a sale. I am unaware of any serious analyst who has ever claimed a 1:1 relationship between an unauthorized copy and a lost sale, whether we are talking about photocopying or whether we are examining file-sharing. There are several estimates that the number of music files exchanged on file-sharing networks is larger than the number purchased through legitimate channels. If so, file-sharing could cause a ma jor loss of sales even if only a relatively small percentage. of unauthorized downloads translated into a lost sale. Nevertheless, estimates of the number of music files downloaded in file-sharing networks vary widely. In this paper I examine the different empirical methodologies that have been chosen in attempts to shed some light on this issue. These studies generally take different approaches in terms of their data analysis. The studies consistently find that file-sharing has led to a serious decline in record sales, except for one highly publicized study that reaches very different, and in my opinion, highly implausible conclusions.
Main Results of the Study
- The theory underlying the analysis of file-sharing has not received the attention it deserved. It has always been clear that some possible aspects of file-sharing would harm copyright owners, such as the substitution of copies for the purchase of originals.
- What has not been understood is that the use of file-sharing to sample products is also likely to lead to harm to copyright owners. Theoretical conditions under which file-sharing might be beneficial to copyright holders seem farfetched.
- A broad analysis of the various theoretical factors at work supports a view that file-sharing is likely to cause serious damage to the owners of copyright materials that are shared.
- Empirical examinations need to meet a higher hurdle than normal before they might be considered to over tern the expectation that the birth of file sharing leads to the subsequent decline in CD sales.
- The political arena is impatient in its search for an answer and for academics to reach unanimity. In any case, it seems that file-sharing hurts copyright owners and that it is responsible for most, if not all, of the recent decline in sales.
Policy Implications as Stated By Author
More empirical studies are needed to fully understand the impact of file-sharing.
Coverage of Study
|Level of aggregation:||Publication|
|Period of material under study:||Not stated|